Why the Microsoft Dynamics Products Are Struggling to Enter the Cloud

This is a guest post by Hunter Richards of Software Advice, which reviews the best online accounting software.

Aggressively pursuing their cloud marketing strategy, Microsoft’s motto has become “We’re all in!” The recent Office 365 announcement also demonstrates Microsoft’s commitment, even at the risk of cannibalizing the company’s on-premise alternatives. But what does this mean for the Microsoft Dynamics product line?

Here are the main challenges we see in migrating these four ERP systems:

• Architecture. The current Microsoft Dynamics ERP products are built on a single-tenant, hybrid client/server and web-enabled architecture. This architecture works just fine, but it lacks the pure web, multi-tenant architecture required to take full advantage of the cloud’s economies of scale. The Dynamics products will need to be rewritten to accomplish this.

• Multiple products. While they’re all built on Microsoft platform technologies, the data models and application logic of Dynamics AX, SL, GP and NAV are each unique. So Microsoft will need to converge all four products onto a single cloud architecture – that’s quite a challenge. The company has already abandoned Project Green, the plan to converge the Dynamics products.

• Partner channel. Microsoft’s channel partners have made their money from reselling Dynamics, implementation services, hardware sales and product upgrade cycles for years. They’ll need to change their business strategies for the cloud as major resale opportunities fade. Moving to the cloud will be a rough transition for the tried and true VAR channel.

• Market readiness. Is Microsoft’s market even ready for Dynamics in the cloud? Sure, there’s plenty of hype over the cloud – and the benefits are valuable. But the Dynamics user base isn’t yet demanding a true cloud solution. So Microsoft will probably wait to time the major product cycle with its customer base’s appetite. This will surely happen, but it remains to be seen when.

Microsoft has several different choices for their future cloud strategy:

• Build a new solution similar to Dynamics CRM, which offers a hybrid of cloud and on-premise. Their best bet is probably to leverage the Dynamics CRM platform.
• Acquire an ERP cloud computing player like Intacct or NetSuite. We see this as less likely since there’s no single player with meaningful market share and .Net technology.
• Move all four Dynamics products to a cloud computing architecture, essentially replicating four products’ functionality on four evolving platforms.
• Market around the issue, offering hosted options through partners, but never fully embracing true cloud-based ERP. Risk missing the transition to cloud computing.

Want to share your own thoughts? Vote on the poll with your prediction of Microsoft’s cloud strategy.

____________________________

Hunter Richards

Accounting Market Analyst

Software Advice

(512) 364-0118 (office)

(800) 918-2764 (toll free)
hunter@softwareadvice.com

*These are not the views of SaaS Newswire but is an objective opinion and post that we thought was great to distribute*

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